2012 (5) TMI 279 - AT - Income Tax

Tribunal upholds CIT(A) decision on deduction eligibility under section 80IB(10) for multiple assessment years.

The Tribunal upheld the CIT(A)'s decision, allowing the appellant's deduction under section 80IB(10) for Assessment Years 2002-03 to 2007-08. The delay in ... Deduction u/s 80IB(10) - completion certificate - housing projects - the only contention of the AO for rejecting the claim of appellant for all these six AYs is that there is no completion certificates in respect of above mentioned three housing projects issued by the Corporation - The Municipal Corporation had issued the completion certificate on 18.06.2010, 23.06.2010 and 24.06.2010 in respect of Permission No. 3737/27.03.2001, 299/04.09.1999 and 580/02.11.1999 respectively - The Municipal authority has not pointed out any defect and irregularity in the assessee's application dated 26.11.2007 submitted for issuance of completion certificate of all the said projects - Decided in favor of the assessee Issues Involved:1. Whether the Assessing Officer (AO) was justified in disallowing the claim of deduction under section 80IB(10) of the Income-tax Act, 1961, due to the non-obtainment of the completion certificate within the prescribed time.Detailed Analysis:1. Disallowance of Deduction under Section 80IB(10):Facts and Background:The appellant, a partnership firm involved in building and developing residential units, claimed deductions under section 80IB(10) for three housing projects: 'Surendra Enclave', 'Surendra Vihar Phase-I', and 'Surendra Garden'. The AO disallowed these deductions for the Assessment Years (AYs) 2002-03 to 2007-08, arguing that the completion certificates were not obtained from the local authority by the statutory deadline of 31.03.2008.Arguments by the Departmental Representative (DR):The DR contended that the completion certificates were issued by the Municipal Authority in June 2010, beyond the prescribed period, thus the construction completion date should be considered as the date of issuance of the certificate, disqualifying the appellant from claiming the deduction.Findings of the CIT(A):The CIT(A) reviewed the legislative intent behind section 80IB(10), emphasizing that the provision aims to promote housing projects within approved developmental plans. It was noted that the appellant had applied for the completion certificates on 26.11.2007 and fulfilled all formalities. The delay in issuance by the Municipal Corporation was attributed to the time taken for inspection due to possession being given to most units before the application.Legal Provisions and Interpretation:Section 301 of the Madhya Pradesh Nagar Palika Adhiniyam mandates that a completion certificate should be issued within a specified period after the construction is completed and inspected. The CIT(A) inferred that since the appellant had completed the construction and applied for the certificate within the stipulated time, the projects should be deemed completed by 31.03.2008, even though the certificates were issued later.Supporting Judgments:The CIT(A) referenced several ITAT decisions, including:- Hindustan Samuha Awas Ltd. vs. ITO: The Tribunal held that if the assessee has applied for the completion certificate and fulfilled all requirements, the delay in issuance by the local authority should not disqualify the deduction claim.- M/s Satish Bora and Associates: It was determined that the date of completion should be considered as the date when the application for the completion certificate was made, provided all formalities were completed.- Sanghvi and Doshi Enterprise: The Tribunal allowed the deduction even when the completion certificate was issued after the due date, recognizing that the delay was beyond the assessee's control.- M/s D.K. Construction: The Tribunal emphasized that the crucial date is when the construction is completed and the application for the completion certificate is made, not the date of issuance.Conclusion:The Tribunal upheld the CIT(A)'s order, concluding that the appellant was entitled to the deduction under section 80IB(10) for AYs 2002-03 to 2007-08. The Tribunal emphasized that the delay in the issuance of the completion certificate by the local authority, despite the appellant fulfilling all requirements and applying in time, should not penalize the appellant. The appeals filed by the revenue were dismissed.Judgment:All appeals filed by the revenue were dismissed, affirming the CIT(A)'s decision to allow the deduction under section 80IB(10) for the appellant. The decision was pronounced in the Open Court on 9.12.2011.